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What Is a Debt Collection Agency?

A debt collection agency is a company that is hired by creditors to collect money that is owed to them. Debt collectors may contact the debtor by mail, telephone, or in person in an effort to get the money back. They may also take legal action if necessary. Debt collection agencies are regulated by the Fair Debt Collection Practices Act (FDCPA). This act prohibits certain methods of debt collection and gives consumers certain rights. If you have had problems with a debt collector, you can file a complaint with the Consumer Financial Protection Bureau (CFPB).

How Debt Collection Agencies Work?

When most people hear the term "debt collection agency," they automatically think of harassing phone calls and threatening letters. However, debt collection agencies actually play a vital role in the economy by ensuring that consumers and businesses repay their debts.

Collection agencies have a specific type of debt they specialize in collecting. For example, an agency might only work with delinquent accounts worth at least $200 and less than two years old. By limiting their target audience to those within the legal limits for pursuing payment from these creditors it makes sure everyone involved remains safe - especially you!